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Markets have closed the session on a lower note tracking weakness among banks, capital goods and metal shares.
Further, global markets are also witnessing weak trend as Greece and its international creditors yet again failed to sign a truce.
Provisionally, the Sensex ended down 86.97 points at 27,809 and Nifty closed 31 points 8,382.
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Update at 14:30
The benchmark indices have recovered from their intra-day lows and are trading virtually unchanged this afternoon amid weak Asian cues as the Shanghai markets slumped on margin crackdown and policy uncertainty.
At 2.30pm, the Sensex was down 18 points at 27,877 and Nifty was down 31 points 8,367.
The mid-cap and small-cap indices were also flat at 10,687 and 11,138 respectively.
On the currency front, the rupee continued to trade flat against the US dollar at 63.60 as gains in the US currency overseas capped upside gains.
Meanwhile, RBI Governor Raghuram Rajan has asked central banks from across the world to define "new rules of the game" as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.
State-run banks are currently "sufficiently" capitalised, but it would be better if the government injects more capital in this fiscal year, Reserve Bank of India Deputy Governor R Gandhi said on Friday. Gandhi added that banks would need more capital to meet the global Basel III regulatory requirements.
GLOBAL MARKETS
Investors stampeded out of Chinese stocks on Friday amid increasing signs that the country's eight-month-long bull run was running out of fuel. The Shanghai Composite Index lost 7.4% to 4,192.87 points as regulatory vigilance on high risk margin trading while the uncertainty over Beijing's monetary policy stance also weighed on sentiment.
Shares in Hong Kong also tracked weakness in the mainland. The Hang Seng was down nearly 2%. Further, Japan's benchmark index, the Nikkei ended down 0.3% while Straits Times was down 0.8%.
European shares also opened lower tracking the sharp sell-off in China while uncertainty of Greece concluding a deal with its creditors to avoid debt default also weighed on investor sentiment. The CAC-40, DAX and FTSE-100 were down 0.6%-1% each.
SECTORS & STOCKS
The Bankex and oil sectors are the top sectoral losers on the BSE.
Financials witnessed selling after the Reserve Bank of India highlighted weakness in asset quality on the back of rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).
ICICI Bank lost 1.4% at Rs 310. Post market hours on Thursday, the banking heavyweight had announced a reduction of 5 basis points (bps) in its base rate to 9.70% per annum (pa) from 9.75% with effect from 26 June 2015. Kotak Mahindra Bank, Yes Bank, Axis Bank, HDFC Bank and SBI were down 0.7-1.6% each.
The oil space is also witnessing a fair bit of selling, with Gail, Cairn India, IOC and Oil India losing about 1% each.
Capital goods shares are also witnessing profit-taking, with L&T and BHEL easing by 1.5-2.5% each.
However, IT majors bucked the weak market trend amid weakness in the rupee. Business consulting firm Accenture raised its full-year revenue as well as earnings per share (EPS) forecast, further bolstering the IT space. Infosys, TCS and Wipro were up 1-2% each.
The market breadth is weak. Out of 2669 stocks traded on the BSE, there are 1150 advancing stocks as against 1400 declines.
